Let’s Not Reinvent the Wheel in Puerto
Puerto Rico’s status as a U.S. territory creates unique challenges, some of which must be confronted to resolve its debt crisis. The good news is that policymakers do not have to reinvent the wheel to solve Puerto Rico’s current crisis—in fact, the Obama administration’s plan to deal with Puerto Rico is straightforward because it consists of steps previously taken in cities and states across the United States. When many Americans think of Puerto Rico, they think of the beach resorts that are advertised on the mainland as the heart of the island’s local economy. In fact, Puerto Rico has a manufacturing-heavy economy that has been heavily depressed for nearly 10 years , in part as an unintended consequence of a change in federal tax policy . The Obama administration’s plan should be lauded for not falling into the austerity trap that has cost Europe a lost decade and instead recognizing that policies that promote economic growth are a key pillar to solving this crisis. To be sure, the...